Thursday, September 15, 2011

Will China Find a New Balance Between the Environment and Economic Growth?

Will China Find a New Balance Between the Environment and Economic Growth?
Commentary by Peter Bosshard
China US Focus, September 1, 2011

The pace at which China is developing its economy is nothing short of
breathtaking. Yet the country pays a high price for this development.
The train crash near Wenzhou, the oil spill in the Yellow Sea and other
recent disasters have demonstrated that the breakneck speed of China's
industrialization has put public safety, health and the environment at
risk. "China should say no to a blood-stained GDP," China's party
newspaper, the People's Daily, warned in a dire commentary on the
high-speed train disaster.

The hydropower sector illustrates the risks of China's rapid economic
development. Over the past 60 years China has built half the world's
large dams. It boasts a higher hydropower capacity than any other
country and with the Three Gorges Dam, has built the world's biggest
hydropower project. Once Chinese dam builders started going overseas,
they quickly rolled up the world market. We are currently aware of more
than 250 dam projects with Chinese involvement in 68 countries.
Sinohydro, a state-owned enterprise which recently announced a
multi-billion dollar listing at the Shanghai stock exchange, says that
it controls 50% of the global market for hydropower projects.

While Chinese dam builders have not had a big public disaster since the
1970s, technical, social and environmental problems are simmering. In
international comparison Chinese dams have a bad safety record, and
several projects came to the brink of collapse after the Sichuan
earthquake of 2008. In many projects, thousands of local people have
protested against insufficient compensation for their lands and abuses
by corrupt local officials. In May 2011, China's highest government body
acknowledged that the Three Gorges Dam, which like the high-speed trains
had served as a symbol of the country's engineering prowess, was causing
"urgent problems" in terms of environmental protection, geological
hazards, and relocated communities.

As Chinese dam builders have gone overseas, many host governments have
applauded the rapid pace with which they have assessed and implemented
projects. But being late-comers to the global market, Chinese companies
have taken on many projects in regions that are environmentally fragile
and beset by social tensions. And like at home, they have often
prioritized technical and economic aspects at the cost of the
environment, local communities, and human rights. In recent months and
years, UN bodies have expressed concerns over a Chinese dam in Sudan
that has caused massive human rights violations and a Chinese funded-dam
in Ethiopia that would devastate a unique World Heritage Site.

A new conflict over a Chinese dam project has recently flared up in
Burma's Kachin state. The China Power Investment Corporation (CPI) plans
to build the controversial Myitsone hydropower project on the confluence
of the Irrawaddy River. The local Kachin population fears that the
project will lead to widespread environmental destruction and only
enrich the country's elite. The environmental baseline study which the
company commissioned found that "there is no need for such a big dam to
be built at the confluence of the Irrawaddy River." Yet CPI is forging
ahead with the project. The start of construction has led to military
conflicts between the Kachin rebel movement and the Burmese army, and
has already displaced 30,000 people.

The Chinese government has stated clearly that it wants its companies
and financiers to be socially and environmentally responsible actors.
Since 2006, it has issued several guidelines urging Chinese overseas
investors and contractors to respect the rights of local communities,
workers, and the environment. Sinohydro, the world's biggest hydropower
company, has recognized that state-owned enterprises are the face of
China's soft power in foreign countries. The company has engaged in a
dialogue with International Rivers since 2009, and has just drafted an
environmental policy which reflects and at times goes beyond generally
acknowledged international standards.

I have been personally involved in the dialogue with members of
Sinohydro's management, and have been impressed by their openness and
interest in civil society concerns. We believe that the company's
environmental policy could set a model for Chinese and Western dam
builders, and will continue to bring in international best practice
examples and the concerns of local communities. But we are also aware
that implementing a strong and effective policy presents a huge
challenge. Hydropower can be an important source of electricity. But
dams put freshwater ecosystems, which according to the World
Conservation Union are the world's most endangered ecosystems, at risk.
And as the Myitsone project illustrates, they often exacerbate conflicts
with local communities over scarce land and water resources.

The recent railway disaster and oil spills are stark warning signs about
the risks of our narrow focus on economic growth. We hope that Chinese -
and Western - companies will take these warnings seriously. We all need
infrastructure development, but not at the cost of public health, safety
and the environment.

Peter Bosshard is the policy director of International Rivers, a
non-profit organization that protects rivers and defend the rights of
communities that depend on them.

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